While working on those entangled branches for the past few days, I listen to podcasts on the ute radio that I’ve downloaded over the past 12 to 18 months. It suddenly hit me that the three people whose work I follow and respect the most are women’s. I can’t help wondering why this is. Could women be actually cleverer than men? Are they most able to think into the future?
Susan Krumdieck is the engineer with more degrees than a thermometer plus a PhD, Nicole Foss whom I think can match Susan’s pedigree but has additional expertise in economic matters, and Gail Tverberg, the actuary with the uncanny ability to analyse what’s going on and explain it in a way most people should understand…… the only male standout for me is Chris Martenson, though I think his website is too much about how to stay rich in the collapse rather than how to survive it….
A couple of days ago, not one but two really good articles landed in my news feed commenting on how the collapse of the price of oil is going to cause mayhem this year, and is a clear sign of diminishing returns. One was by Gail, the other quoted her….
Nicole has written a long article which was published in three parts over at the Automatic earth, I highly recommend it. Nicole’s article being almost book length, I will leave it to you to follow the link and read it yourself. Gail’s article, for me, begins with…:
the effects of not having enough energy flows may spread more widely than the individual plant or animal that weakens and dies. If the reason a plant dies is because the plant is part of a forest that over time has grown so dense that the plants in the understory cannot get enough light, then there may be a bigger problem. The dying plant material may accumulate to the point of encouraging forest fires. Such a forest fire may burn a fairly wide area of the forest. Thus, the indirect result may be to put to an end a portion of the forest ecosystem itself.
How should we expect an economy to behave over time? The pattern of energy dissipated over the life cycle of a dissipative system will vary, depending on the particular system. In the examples I gave, the pattern seems to somewhat follow what Ugo Bardi calls a Seneca Cliff.
The Seneca Cliff pattern is so-named because long ago, Lucius Seneca wrote:
It would be some consolation for the feebleness of our selves and our works if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.
This is doubly interesting, for me at least, because it appears that oil, and energy production generally, may be acting just like the above cliff….
Figure 6 shows that the FSU’s consumption of energy products started falling precipitously in 1991, the year of the collapse–very much a Seneca Cliff type of decline.
The Standard Wrong Belief about the Physics of Energy and the Economy
There is a standard wrong belief about the physics of energy and the economy; it is the belief we can somehow train the economy to get along without much energy.
In this wrong view, the only physics that is truly relevant is the thermodynamics of oil fields and other types of energy deposits. All of these fields deplete if exploited over time. Furthermore, we know that there are a finite number of these fields. Thus, based on the Second Law of Thermodynamics, the amount of free energy we will have available in the future will tend to be less than today. This tendency will especially be true after the date when “peak oil” production is reached.
According to this wrong view of energy and the economy, all we need to do is design an economy that uses less energy. We can supposedly do this by increasing efficiency, and by changing the nature of the economy to use a greater proportion of services. If we also add renewables (even if they are expensive) the economy should be able to get along fine with very much less energy.
These wrong views are amazingly widespread. They seem to underlie the widespread hope that the world can reduce its fossil fuel use by 80% between now and 2050 without badly disturbing the economy. The book 2052: A Forecast for the Next 40 Years by Jorgen Randers seems to reflect these views. Even the “Stabilized World Model” presented in the 1972 book The Limits to Growth by Meadows et al. seems to be based on naive assumptions about how much reduction in energy consumption is possible without causing the economy to collapse.
It’s exactly what George Monbiot either can’t understand, or refuses to see….
A monster called ‘diminishing returns’
There is, and it’s a rather grim energy fairy tale. This one shows how the world’s economy depends on the quality of energy burned, and not the amount of money spent. When economies spend cheap oil, GDP rises; when they switch to costly and unconventional stuff, growth comes to a screeching halt.
In this unfolding story, cheap credit played a big role. It allowed an industry to carelessly borrow trillions to chase ultra-expensive and risky resources such as bitumen and shale oil.
An energy industry laden with toxic debt is now earning less money than what it costs to shovel bitumen or frack shale. And this kind of debt is not going to end well for financial markets. Or for ordinary people.
But the darkest character in this fairy tale is the monster called diminishing returns.
On a diet of cheap oil, the world financial system grew on energy surpluses like a wildfire dines on trees in a forest.
But no more. The cheap stuff is gone, and companies are now frantically fracking North Dakota at a cost of $60 a barrel or mining northern Alberta’s heavy bitumen at costs as high as $80 a barrel. With oil at $30 a barrel, many companies are, as respected Houston analyst Art Berman recently put it, “losing their asses.”
Diminishing returns explain why. Imagine a 20-year-old vehicle that now costs more money to maintain than it does to drive. Every time the owner pours more cash and energy into the clunker, the benefits and rewards keep shrinking. An old car can be a treadmill into poverty.
In a 2014 paper for the Philosophical Transactions of the Royal Society, David Murphy, an energy expert at St. Lawrence University, chronicles what diminishing returns really mean in energy terms.
For every barrel of energy invested in global oil production, 17 are now extracted and turned into wealth. (Nearly 100 years ago, one barrel of investment yielded 100 barrels more, a cornucopia that built the global economy.)
But the industry must now drill deeper and deeper into ugly reservoirs and then fracture them apart to capture molecules of gas or oil. As a consequence, U.S. oil production yields only 11 barrels for every barrel invested, and that number is fast declining. Ultra-heavy bitumen and other unconventional hydrocarbons capture returns of less than 10 and in many cases as low as three.
Energy resources that deliver such paltry returns are civilization shrinkers. They cannibalize other resources and offer no energy surplus.
Enjoy your homework…… I’ve got things to do to escape this predicament!